Upside Appears Limited
By Paul Cherney
Bulls and bears are in a stalemate right now on two time horizons, intraday and end-of-day.
End of day indicators for the Nasdaq are neutral and weakening.
S&P 500 end of day indicators are neutral.
Assume mostly sideways trading unless the S&P 500 can close above 1,053.79 or the Nasdaq can close above 1,957.53. In either case a new lift in prices would be natural, but brick wall resistance is directly overhead starting at 1,068 for the S&P 500 and 1,979 for the Nasdaq, so upside appears limited.
If the VXO (market volatility index) starts rising, it would probably not be healthy for stock prices. It would take a move in the VXO above its 10-day exponential moving average to raise real concerns. Very near the close of trading on Friday, the VXO's 10-day exponential moving average was 18.14.
Nasdaq immediate resistance remains 1,930-1,966.87, with layers at 1,934-1,944 and 1,941-1,953. The 1,957.53 level mentioned above is the intraday high print from Thursday. The next layers of resistance are 1,979-2,011.25 and 2,042-2,073.
The S&P 500 has only one layer of immediate resistance: 1,047-1,053.79, with a focus at 1,047-1,050.11. After resistance at 1,053.79, the next resistance is 1,068-1,106 with thick, brick-wall style resistance at 1,068-1,090.
Immediate Nasdaq support is 1,923-1,989 with thick support at 1,917-1,906.
The S&P 500 has supports at 1,036-1,026 and 1,028-1,023.93.
Expectations for S&P 500 1,068 or higher, and a Nasdaq close of 1,988, both before Dec. 8, have not become extinct, but a rising VXO would not lend itself technically to expectations for a move higher.
Cherney is chief market analyst for Standard & Poor's